HOW CREDIBLE ARE EURO-BONDS – AND CARBON CREDITS FOR WOOD COMBUSTION ?

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1 HOW CREDIBLE ARE EURO-BONDS – AND CARBON CREDITS FOR WOOD COMBUSTION ?Rolf Czeskleba-Dupont, Ph.D.,M.Sc.Roskilde UniversitySocial Science Basic StudiesDepartment of Environmental, Social and Spatial ChangeTo be presented at the 16th Workshop on Alternative Economic Policy in Europe, arr. By EuroMemorandum Group, University of Crete, sept , Workshop: Dimensions of the Crisis, co-ordinator: F.O.Wolf'n' for notesMy departmental affiliation given here (ENSPAC) is informal in a research group (METRIK); my official position as part time lecturer at the Social Science Basic Studies is, however, administratively defined as belonging to Department of Society and Globalisation (ISG), which is given on the paper contribution.

2 Disposition Economical premises and choicesEcological choices and premisesHow can the EU contribute to sustainable world-system development?Threatening forest degradation in the NorthEIB loans and political ecologyKyoto II and EU responsibilityDisposition

4 Economic premises Are environmental expenditures consumption (C)?YES: They are expenditures taken from current income (can be reduced under deficit) !NO: These expenditures are investments (I); convert savings (S) into investments (S => I)The latter helps realise necessary socio-technological transformations - or development; as distinct from growth (= more of the same) nThe macroeconomic argumentation was already used by ecological economists in the GDR against traditionalists, see Hans Roos and Günter Streibel 1979, afterword. It was convergent with the eco-technological arguments of Barry Commoner 1972 and 1976, stressing the need of substitution instead of end-of-pipe regulation. See my review (in German) of Roos/Streibel and Commoner 1976 in DAS ARGUMENT, vol.21/1979 (#117),

5 Political-economical route NOT taken: Euro-bonds for cohesionStuart Holland's 1992/3 Report to the Delors Commission on economic + social cohesion:1) design reciprocal coordination between EU + member states' budget;2) use the legal obligation of the European Central Bank (ECB) to support economic policy;3) formulate 'broad guidelines of economic policy' for cohesion projects;4)finance common projects by Euro-bonds(S=>I)- and not by taxes taken from national incomeYet, the EIF(Fund) went from elephant to mouse nThe tax issue has been central in populist aggressiveness in Northen countries against a more solidaric attitude against the new Greek government, when they in 2010 were forced to follow austerity policy. It implies a zero-sum game without access of the EU to capital markets.Institutional archeology on EIB and EIF see Holland, Stuart 2010: Financial crises, governance and cohesion: Will governments ever learn up?

6 Preferred political-economical routeStuart Holland: The Treaty of Rome (1958) was driven by market orthodoxy NOT DIRECTLY to include the European Investment Bank(was only mentioned in a protocol)=> The ”balanced and smooth development of the Common Market” (EIB loan remit)to be guaranteed by the famous invisible hand (self-correcting market equilibrium)Therefore: EIB held invisible through decades (Robinson 2009); EU should not take loans! nOn EIB see Holland 2010EIB loan remit quoted in: Hugh Clout 1976: The regional problem in Western Europe.

7 Problem regions as a resultA ”Balanced and smooth development of the Common Market” was, however, NOT realised=> Polarisation in regional developmentThe 1986 Single Market: Building on economies of scale + internal deregulation=> spatial cohesion for sale!James Galbraith 2006: ”Growth of wages and incomes must be inversely proportional to present wage rates”(to converge)

9 Political-ecological route NOT taken: precautionary investmentCommoner's 1990 proposal of transformative investments to save the world from climate change:Rail transport x 109 $/year over 10 yearsOrganic agriculture “Soft chemistry “Energy use “ 10Renewable energy “TOTAL: up to ” 5–20= 50 % of defense budgets world-wide(B.Commoner1990 Making peace with the planet, passim)The precautionary principle in environmental politics is rooted in the 1992 Climate Convention, but is difficult to realise.This experience may lead to the conclusion that there is the same cause for this reluctance as was in 19th century 'Manchester liberalism' against any regulations of the labour market.The latter problem was presumably the reason, why Karl Marx in his Inaugural Adress of the First International Working Men's (!) Association talked about a political economy of 'insight and cautiousness' as characterizing working class interests (see my text contribution)

11 Ecological premises re. forests and CO2Do OLD forests bind LESS carbon than new ones?Odum 1969: YES, because their growth will reach a climax level;Carey 2001: NO, old forests are UNDERestimated as global carbon SINKSOdums fallacy of composition: He scales up from a single tree to more complex stands with unforeseen eco-features such as biome productivity => CO2 measuring towers (E.D.Schulze in Siberia) nE.-D. Schulze has constructed measuring towers for atmospheric CO2 in Siberia, see Schulze et al. 2005On productivity concepts see Schulze et al

14 Threatening forest degradation in the North n”Half of the primary forests (6oo million hectares) are located in the boreal and temperate regions of the Northern Hemisphere. On the basis of our analysis, these forests alone sequester about 1.3 plus/minus 0.5 gigatonnes of carbon per year. Thus, our findings suggest that 15 per cent of the global forest area, which is currently not considered when offsetting increasing atmospheric carbon dioxide concentrations, provides at least 10 per cent of the global net ecosystem productivity.” (Schulze et al. 2008, 213)

16 Ambivalences of the Manomet studyExcellent in demonstrating that CO2- neutrality from wood combustion is no easy sayDevelopes an accounting METHOD how (FAST) to move from C debt to C neutrality (break even point) and C dividendsYet, parameters and their values favour too fast compensation by too optimistic growth assumptions (see critique by Booth 2010)Solidaric critique is necessary before using it for down-sizing/eliminating wood combustion projects

19 Removing barrier # 3 ? TAX PAYERS BAILING OUT THE BANKSManuel Barroso sept (State of the Union Speech):“We should also explore new sources of financing for major European infrastructure projects.For instance, I will propose the establishment of EU project bonds, together with the European Investment Bank.”=> Is the taboo broken that the EEC/EU cannot take loans?=> Will the bonds be used to lift parts of the financing burden from member states?(Stuart Hollands argument, see my text contribution)

21 Deepening our understanding of infrastructureBarroso will use euro-bonds formajor European infrastructure projects.Tell him that the global environment / ecological system isan ”infrastructure of infrastructures”(as former World Bank director and economist Herman Daly once put it)But it hurries: 20 years have already been lost because of a ”postponed peace-dividend” (RCD 2009).Cost progressions as presaged by the Stern Review have incurred since 1990, when action should have been taken. n

22 No subprime credit for incinerators: redirect renewable energy portfolio!As the Massachussetts Secretary of Energy and Environment announced in July 2010:

23 Kyoto II - an EU responsibility nAlain Lipietz concluded in regard to the original passing at Rio 1992 of the Climate Convention: “Rio was a diplomatic Vietnam for the Bush Administration, since it was obliged to sign the Climate Convention (though it had managed to water it down significantly)” (Lipietz 1992, 188).”This experience of global political dynamics has, unfortunately, not been discussed in therun-up to COP15...Here lies, presumably, a key tounderstanding, why communications at COP15 on climate change went so wrong as they did.The organizers did...not want to discuss, whether a politics of confrontation with the United States again was necessary – not the least because president Obama is held captive by a loud climate denier's front in his own country. (R.C.-Dupont 2010)

24 Procedure within Kyoto II (Umweltbundesamt 2007)German environmental counsellors went public (WGBU1998) with a warning against pitfalls of LULUCFIn a 2007 study for the German Ministry of Environment, Schulze et al. proposed a procedural rationality for country reports:Take BIO-CARBON TARGETS first !Then: decide upon reduction targets from tailpipes and smokestacks (next slide:)WGBU 1998, ch :“Neglect of important sources and sinksThe present version of the IPCC Guidelines doesnot sufficiently consider the conversion of primary tosecondary forests, although this process is one of themost important sources of emissions from terrestrialecosystems (beside deforestation and forestdegradation).In contrast to deforestation, forest degradationis not considered, although this leads to emissions ofthe same magnitude.No incentives are created that positively promotethe conservation of important and stable natural carbon reservoirs, such as above all primary forests and wetlands.”

26 EU competency? EU member states face problem of scope:Territorial resources of renewable energy seem not to match with demands of energy to be supplied.=> Principle of subsidiarity: Plan for a low- carbon society together with EU institutions.Huge investments and choice of paths to sustainable energy systems demand transparent multi-level governance.=> Market power of energy + other corporations to be tamedpolitically - their 'freedom of contracting' is an unequalpower play nAt a public meeting in Copenhagen sept. 2010, a representative of the energy giant Vattenfall voiced the concern of his company that they want to abolish regulations in the Danish Law on heat planning which give consumers the right to intervene against price decisions. He gave as reason that free partners can themselves decide in free contracts – to have a consant price in long time perspective (better for Vattenfalls calculation of profit levels).

27 Literature (1)Booth, Mary S., PhD 2010: Review of the Manomet biomass sustainability and carbon policy study;prepared for the Clean Air Task Force, JulyCarey, Eileen V. et al. 2001: Are old forests underestimated as global carbon sinks? Global Change Biology, vol.7,Clout, Hugh 1976: The regional problem in Western Europe. Cambridge: Cambridge University PressCommoner, Barry 1972: The closing circle. Nature, man and technology. New York: A.KnopfCommoner, Barry 1976: The poverty of power. Energy and the economic crisis. New York: A.KnopfCommoner, Barry 1990: Making peace with the planet. New York: PantheonCzeskleba-Dupont 2009: The 1990 peace dividend – a counter-factual hypothesis. Poster presented at the 1. World Congress on Environmental History, Copenhagen, Aug. 4-8Czeskleba-Dupont 2010: Communication on climate, energy, natural gas and forests as a problem for energy planning. Contribution to the RUC Sunrise Triple C Conference Climate – Change – Communication. New Perspectives after the COP15, April (Ms., 15 p.)Galbraith, James 2006: Maastricht 2042 and the fate of Europe. Toward Convergence and Full Employment. The Levy Economics Institute of Bard College, Public Policy Brief #87George, Susan 1992: The debt boomerang. How Third World debt is harming us all. London: Pluto Press